Frencken - Inventory Still High, Demand Remains Soft

Frencken - RHB Invest 2023-04-21: Inventory Still High, Demand Remains Soft

Frencken - Inventory Still High, Demand Remains Soft

SGinvestors.io

Published: 2023-04-26 02:35 PM

FRENCKEN GROUP LIMITED (SGX:E28)

We expect Frencken (SGX:E28) to incur higher costs from new production sites and newly expanded capacities. Its biggest semiconductor sector customer ASML now faces risks of order cuts by its own major client, Taiwan Semiconductor Manufacturing Co (TSMC). On these near-term headwinds, we trim FY23-24F earnings forecast for Frencken by 6% and 5%.
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Frencken's FY22 earnings are largely in line

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Revenue for the integrated manufacturing services (IMS) division declined by 11% y-o-y, due to the weaker-than-expected recovery of the global automotive industry amid supply chain disruptions.

Gross profit margin narrowed to 15.1% (-1.7ppt) as a result of cost pressures in Europe, and higher depreciation costs from its global manufacturing expansion. This also pulled its EBIT margin down to 8.5% (-0.9ppt) despite some operational cost efficiencies.

A first and final dividend of 3.64 cents was declared.

High inventory, weak demand in semiconductor cycle is still in play.

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Above is an excerpt from a report by RHB Securities Research.
Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.

SGinvestors.io

Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2023-04-21

Read also RHB's most recent report:
2024-11-21 Frencken - Semiconductor Sector Recovery Still In Play; BUY.

Previous report by RHB:
2024-08-23 Frencken - Recovery At Play; Maintain BUY.

Price targets by 4 other brokers at Frencken Target Prices.

Listing of research reports at Frencken Analyst Reports.

Relevant links:
Frencken Share Price History,
Frencken Announcements,
Frencken Dividend Payout Dates & Corporate Actions,
Frencken News